Cheniere Energy Partners, L.P. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Cash Distributions and Net Income (Loss) per Common Unit

Cash Distributions and Net Income (Loss) per Common Unit

12 Months Ended

Dec. 31, 2012

CASH DISTRIBUTIONS AND NET INCOME (LOSS) PER COMMON UNIT [Abstract]

Cash Distributions and Net Income (Loss) per Common Unit

Cash Distributions

Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash (as defined in our partnership agreement). Generally, our available cash is our cash on hand at the end of a quarter less the amount of any reserves established by our general partner. All distributions paid to date have been made from operating surplus as defined in the partnership agreement. The following provides a summary of distributions paid by us during the years ended December 31, 2012, 2011 and 2010:



						Total Distribution (in thousands)
Date Paid	Period Covered by Distribution	Distribution Per Common Unit		Distribution Per Subordinated Unit		Common Units		Class B Units	Subordinated Units	General Partner Units
November 14, 2012	July 1 - September 30, 2012	$	0.425	$	—	$	16,783	—	—	$	342
August 13, 2012	April 1 - June 30, 2012	0.425		—		13,383		—	—	273
May 14, 2012	January 1 - March 31, 2012	0.425				13,323		—		272
February 12, 2012	October 1 - December 31, 2011	0.425				13,176		—		269
November 14, 2011	July 1 - September 30, 2011	0.425		—		13,176		—	—	269
August 12, 2011	April 1 - June 30, 2011	0.425		—		11,446		—	—	234
May 13, 2011	January 1 - March 31, 2011	0.425		—		11,335		—	—	231
February 11, 2011	October 1 - December 31, 2010	0.425		—		11,229		—	—	229
November 12, 2010	July 1 - September 30, 2010	0.425		—		11,227		—	—	229
August 13, 2010	April 1 - June 30, 2010	0.425		—		11,227		—	—	229
May 14, 2010	January 1 - March 31, 2010	0.425		0.425		11,227		—	57,538	1,403
February 12, 2010	October 1 - December 31, 2009	0.425		0.425		11,227		—	57,538	1,403

The subordinated units will receive distributions only to the extent we have available cash above the minimum quarterly distribution requirement for our common unitholders and general partner and certain reserves. As a result of the assignment of Cheniere Marketing's TUA to Cheniere Investments, effective July 1, 2010, our available cash for distributions was reduced. Therefore, we have not paid distributions on our subordinated units since the distribution made with respect to the quarter ended March 31, 2010.

Pursuant to the Blackstone and Cheniere Unit Purchase Agreements, we issued and sold 133.3 million Class B units at a price of $15.00 per Class B unit in the year ended ended December 31, 2012, resulting in total gross proceeds of $2.0 billion. The Class B units were issued at a discount to the market price of the common units into which they are convertible. This discount totaling $1,950.0 million represents a beneficial conversion feature and is reflected as an increase in common and subordinated unitholders’ capital and a decrease in Class B unitholders’ capital to reflect the fair value of the Class B units at issuance on our consolidated statement of partners’ and owners' capital (deficit). The beneficial conversion feature is considered a dividend that will be distributed ratably with respect to any Class B unit from its issuance date through its conversion date, resulting in an increase in Class B unitholders' capital and a decrease in common and subordinated unitholders’ capital. The impact of the beneficial conversion feature is also included in earnings per unit for the year ended December 31, 2012.

Net Income (Loss) per Common Unit

Net income (loss) per common unit for a given period is based on the distributions that will be made to the unitholders with respect to the period plus an allocation of undistributed net income (loss) based on provisions of the partnership agreement, divided by the weighted average number of common units outstanding. The two class method dictates that net income (loss) for a period be reduced by the amount of available cash that will be distributed with respect to that period and that any residual amount representing undistributed net income be allocated to common unitholders and other participating unitholders to the extent that each unit may share in net income as if all of the net income for the period had been distributed in accordance with the partnership agreement. Undistributed income is allocated to participating securities based on the distribution waterfall for available cash specified in the partnership agreement. Undistributed losses (including those resulting from distributions in excess of net income) are allocated to common units and other participating securities on a pro rata basis based on provisions of the partnership agreement. Distributions are treated as distributed earnings in the computation of earnings per common unit even though cash distributions are not necessarily derived from current or prior period earnings.

Under our partnership agreement, the incentive distribution rights ("IDRs") participate in net income (loss) only to the extent of the amount of cash distributions actually declared, thereby excluding the IDRs from participating in undistributed net income (loss). We did not allocate earnings or losses to IDR holders for the purpose of the two class method earnings per unit calculation for any of the periods presented.

The following table provides a reconciliation of net income (loss) and the allocation of net income (loss) to the common units and the subordinated units for purposes of computing net income (loss) per unit (in thousands, except per unit data):



				Limited Partner Units
	Total			Common Units			Class B Units		Subordinated Units			General Partner
Year Ended December 31, 2012
Net loss	$	(150,136	)
Declared distributions	61,501			60,271			—		—			1,230
Amortization of beneficial conversion feature of Class B units	—			(5,149		)	25,319		(20,170		)	—
Assumed allocation of undistributed net loss	(211,637		)	(46,061		)	—		(157,917		)	(7,659		)
Assumed allocation of net income (loss)				$	9,061		$	25,319	$	(178,087	)	$	(6,429	)

Weighted average units outstanding				33,470			43,303		135,384
Net income (loss) per unit				$	0.27		$	0.58	$	(1.32	)

Year Ended December 31, 2011
Net loss	$	(31,019	)
Declared distributions	50,136			49,134			—		—			1,002
Assumed allocation of undistributed net loss	(81,155		)	(14,819		)	—		(64,713		)	(1,623		)
Assumed allocation of net income (loss)				$	34,315		$	—	$	(64,713	)	$	(621	)

Weighted average units outstanding				27,910			—		135,384
Net income (loss) per unit				$	1.23		$	—	$	(0.48	)

Year Ended December 31, 2010
Net income	$	107,568
Declared distributions	104,538			44,910			—		57,538			2,090
Assumed allocation of undistributed net loss	3,030			—			—		2,969			61
Assumed allocation of net income				$	44,910		$	—	$	60,507		$	2,151

Weighted average units outstanding				26,416			—		135,384
Net income per unit				$	1.70		$	—	$	0.45